Federal Court of Australia

Pizzino v Caratti [2023] FCA 1624

ORDERS

THE COURT ORDERS THAT:

1.    The statement of claim be struck out.

2.    The statement of claim be removed from the court file.

3.    The question whether orders should be made in terms of the minute of orders filed by the applicant on 23 November 2023 be adjourned until the next case management hearing.

4.    The applicants do file and serve a substitute statement of claim on or before 16 February 2024.

5.    The question whether any order should be made as to costs of service of the proceedings be determined at the next case management hearing.

6.    The applicants pay the respondent's costs of the application to strike out the statement of claim in any event.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    Mr Alberto Pizzino, Ms Maria McKenna, Ms Rosa Tricoli and Ms Gina Travaglini (Former Owners) claim that they were formerly the registered proprietors of a property in Perth. It is referred to as Lot 76. They say that in 2005 they granted an exclusive option to purchase part of Lot 76 to West Swan Land Corporation Pty Ltd (WSLC) as trustee of the West Swan Land Trust (Trust). For present purposes it is sufficient to observe that they claim that under the terms of the option they transferred the whole of Lot 76 to WSLC on the basis that it would be held on trust for the them until it was subdivided. They allege that it was agreed that, once Lot 76 was subdivided, 16 of the subdivided lots as selected by the Former Owners would be transferred to them. They claim that they have not received the lots.

2    The Former Owners allege that in 2012 they entered into a deed of settlement and release (Deed) with WSLC in respect of their claims concerning Lot 76. They further allege that the settlement provided for WSLC to pay $4 million to them which obligation, on the terms of the Deed, may be discharged in whole or in part by a mechanism for selection by the Former Owners of subdivided lots forming part of Lot 76.

3    The Former Owners further allege that WSLC sold Lot 76 'in globo' to Mirvac (WA) Pty Ltd in December 2014. They claim that the sale was in breach of the terms of the Deed and was a fraud by WSLC. They also allege that WSLC breached its duties as trustee of the Trust when it sold Lot 76. There also appears to be some form of claim to the effect that there was a breach of trust as to some interest of the Former Owners in Lot 76 that existed at the time of the sale to Mirvac. The precise nature of any such claim is difficult to ascertain from the presently available materials. It is not claimed that Mirvac acquired Lot 76 subject to the claims of the Former Owners.

4    Mr Allen Caratti is alleged to have been the only officer of WSLC at the time of the sale to Mirvac. He is alleged to have been involved in and party to the fraud and breach of trust by WSLC.

5    It is further alleged by the Former Owners that in about November 2015, at a time when the Former Owners were not aware of the sale to Mirvac, Mr Caratti orally assured Mr Pizzino that funds would be forthcoming and there was no need to take proceedings or action against WSCL. It is said that the oral assurance was a representation that was relied upon by Mr Pizzino by refraining from pursuing WSLC. It is said that by reason of the representation, reliance and detriment, Mr Caratti is estopped from denying the representation. It is said that these matters give rise to a claim of promissory estoppel that may be pursued against Mr Caratti by the Former Owners.

6    WSLC was deregistered in April 2017.

7    By proceedings commenced in this Court by originating application and statement of claim on 22 September 2023, the Former Owners seek relief against Mr Caratti.

Relief sought against Mr Caratti

8    The originating application points to the statement of claim as stating the relief sought. In the statement of claim the relief sought is expressed in the following terms:

THE APPLICANTS CLAIM

1.    a.    There be an enquiry determination and account as to property to be vested in the Commonwealth pursuant to Section 601AD(1A) of the Corporations Law as a result of the deregistration of WSLC and recovery of same from whosoever is or was in possession of same.

b.    There be a declaration that the Applicants are entitled to an account and damages or other sums or property from the West Swan Land Trust.

c.    Directions be given and a determination be made as to the payment or transfer to the Applicants of sufficient property out of that vested in the Commonwealth or other entity to satisfy in whole or in part the amount found in b above.

2.    In the event that no or insufficient property is made available to the Applicants pursuant to 1 above and in any event:

a.    There be a Declaration that WSLC has in trade or commerce engaged in conduct that is misleading or deceptive within the meaning of and in contravention of Section 18 of the ACL or alternatively in trade or commerce engaged in conduct that is unconscionable within the meaning of the unwritten law as referred to and in contravention of section 20 of ACL of and in respect to the entry into and failure to perform an Option Deed dated 29/4/2005 and a Deed of Settlement and Release dated 15/10/2012 both made between WSLC and the Applicants.

b.    There be a Declaration that the Respondent was a person involved in one or more of the said contraventions within the meaning of Section 236 of the ACL.

c.    An order that the Respondent pay the Applicants damages pursuant to section 236 of ACL or otherwise.

3.    There be a declaration that the Respondent has in trade or commerce engaged in conduct that is misleading or deceptive within the meaning of and in contravention of Section 18 of ACL or alternatively in trade or commerce engaged in conduct that is unconscionable within the meaning of the unwritten law as referred to and in contravention of section 20 of the ACL in respect to representations as to the availability of future funds by virtue of which the Applicants have suffered loss or damage.

4.    There be a declaration that the WSLC has repudiated the [Deed].

5.    There be a declaration that WSLC has acted fraudulently in dealing with the Applicants in respect to Lot 76 in breach of 409 of the Criminal Code and that the Respondent has aided and abetted such fraud by virtue of which the Applicants have suffered damage and that the Respondent pay the Applicant damages.

6.    A Declaration that WSCL has acted in breach of trust in its dealings with the Applicants and that the Respondent was an accessory to such breach and that the Respondent pay the Applicants damages.

7.    An order that the Respondent pay to the Applicants penalty or exemplary damages.

8.    An order that any damages attract interest calculated at the rate 6% per annum from 28th February 2015 to 1 March 2016 pursuant and thereafter at 9% per annum.

INTERLOCUTORY ORDERS SOUGHT

1.    The Respondent discover documents as to dealing with proceeds of sale by WSLC of Lot 76 on Plan 2747, being formerly the land comprised in certificate of title Vol 1320 Folio 136.

2.    The Respondent discover all accounts and copy tax returns and notices of objection for West Swan Land Trust and for WSLC.

3.    The Respondent sign all necessary authorities and documentation to ATO as to providing tax records for WSLC and West Swan Land Trust.

4.    The Respondent discover a copy of the Deed constituting West Swan Land Trust.

5.    Directions to be given as to the appointment of a replacement trustee for West Swan Land Trust.

Application by Mr Caratti to strike out

9    Mr Caratti applied to strike out the statement of claim on a number of grounds. He swore an affidavit in support of that application. Amongst other things, he deposed to the following matters in his affidavit:

(1)    He confirmed that the Deed was entered into and that he signed the Deed in his capacity as director of WSLC.

(2)    He produced certain documents filed in proceedings in the Supreme Court of Western Australia being proceedings referred to in the Deed.

(3)    He produced copies of documents filed in other court proceedings and copies of orders made in those proceedings.

(4)    He referred to an affidavit of Mr Pizzino sworn in the proceedings in this Court.

(5)    As to the sale of Lot 76, he deposes as follows:

I recall the sale of the properties referred to in the transfer at pages 39 to 42 of the affidavit of Mr Pizzino sworn 12 September 2023, Lot 76 was one of a group to properties sold at that time. The proceeds of sale were all collected by Suncorp-Metway Ltd as mortgagee of the properties.

10    Mr Caratti did not otherwise deal with the claims in the statement of claim. In particular, he did not provide any answer to the overall claim by the Former Owners that they had never received the promised consideration in respect of Lot 76 despite many years having elapsed since the transfer of the property to WSLC through dealings with Mr Caratti.

11    Mr Caratti advanced submissions in support of the strike out application which, speaking broadly, alleged that any claim is out of time or is an abuse of process because it should have been raised in earlier proceedings in the Supreme Court or is scandalous as alleging fraud without the requisite material facts. It was also submitted that the claims otherwise do not disclose a cause of action. Finally, it was said that the relief sought includes claims against the Commonwealth in proceedings to which it is not a party, relief against the Trust, which is not an entity and against WSLC which ceased to exist in 2017.

12    I determined that the application to strike out the statement of claim must be upheld with liberty to replead. At the time of making those orders I indicated that I would provide my reasons for doing so. These are my reasons.

General principles

13    The sole objective of a pleading is to clearly identify matters in dispute. This requires a clear articulation of the factual basis for the claim and the ready identification of the matters relied upon to support each element of the claim or defence. As was observed in in Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102; (2019) 269 FCR 349 at [30] (Middleton, Perram and Anastassiou JJ):

There should be no doubt about whether any particular cause of action is relied upon. At a minimum, the pleading should be pellucidly clear about the causes of action, or claims, relied upon by the applicant, including any claims made upon an alternative hypothesis. The explicit clarity with which a claim is expressed should ensure that there be no need for the opposite party to closely scrutinise the pleading in a process of textual construction to determine whether a particular fact is relied upon, or the purpose for which it is alleged, much less to decide whether a particular cause of action is raised. The same basic requirement applies to any defence raised in answer to a claim.

14    Clear, concise pleadings that articulate the case alleged are essential to the fairness of the conduct of court proceedings: Betfair Pty Limited v Racing New South Wales [2010] FCAFC 133; (2010) 189 FCR 356 at [49]-[53] (Keane CJ, Lander and Buchanan JJ).

Problems with the statement of claim

15    The statement of claim is difficult to follow. Respectfully, beyond extraction of the broad nature of the allegations made (as described above) and the identification of the allegations advanced against Mr Caratti as being allegations of knowing involvement in misleading and deceptive conduct or fraud by WSLC of some kind as well as some kind of estoppel claim, it is not possible to ascertain from the statement of claim the precise nature of the causes of action that are asserted by the Former Owners against Mr Caratti as the sole respondent to the proceedings.

16    The confusion is manifest in the relief sought. It begins with a claim to an inquiry as to property vested in the Commonwealth consequent upon the deregistration of WSLC and for orders by way of account or transfer. From the terms of the statement of claim this appears to have its foundation in some form of claim that there is property held on trust for the Former Owners that has vested in the Commonwealth. The basis for such a claim cannot be discerned from the statement of claim and, in any event, it appears to be a claim for relief against the Commonwealth, a non-party.

17    In the alternative to the claim to an inquiry (and consequent orders) there is a claim that there has been misleading or deceptive conduct by WSLC in relation to the entry into the option and the Deed. WSLC is deregistered and not a party so the purpose of those claims seems only to support the further claims that Mr Caratti was a person involved in those contraventions. A claim of that kind relates to events that occurred many years ago. In circumstances where, as might be expected, Mr Caratti complains that any such claims are well out of time, it is necessary for such claims to be pleaded with some precision in order to identify when they accrued. The statement of claim lacks any precision in that regard.

18    The next claim to relief appears to relate to the allegations that Mr Caratti provided some form of assurance in 2015 (after the Deed was entered into) that funds would be forthcoming. This too is a claim that is pleaded in broad and general terms in the statement of claim. As has been explained it is said to be a claim of some form of promissory estoppel. It appears to be a claim as to what Mr Caratti represented to Mr Pizzino in 2015 he would do at some time in the future. Some eight years have elapsed since then during which time it is alleged that Mr Caratti has not paid the amounts that he assured Mr Pizzino would be paid. Precisely how those matters may give rise to some form of claim in estoppel which requires Mr Caratti to pay the damages and exemplary damages claimed against him is unclear. Nor are the material facts relied upon to establish all of the elements of a claim of promissory estoppel evident.

19    Otherwise, the relief sought suggests that a claim of fraud or knowing participation in a breach of trust is made against Mr Caratti. It is not possible to discern from the statement of claim the precise nature of these claims.

20    A further difficulty is that the pleading fails to identify with any precision the nature of the trust to which the allegation of breach of trust relates. The claim as to the existence of the trust also appears to form part of the basis for the claim of fraud, but the extent to which that is so is not clear. In the course of oral submissions for the Former Owners in opposition to the strike out application it was suggested that the relevant trust is the Trust of which WSLC was the trustee before it was deregistered. However, the Former Owners are not alleged to be beneficiaries of that Trust. Rather, their claim appears to relate to a trust that was said to arise from the terms of the option in relation to the interest of the Former Owners in Lot 76.

21    The confusion concerning the allegations of breach of trust is compounded by two matters. First, there is no explanation evident from the statement of claim as to how any alleged trust interest of the Former Owners was said to continue despite the terms of the Deed. In oral submissions it was suggested that because the Deed had not been performed it was not enforceable. However, a claim of that kind cannot be discerned from the pleading. Second, the relief sought includes an order that a replacement trustee be sought for the Trust. It is difficult to see how such relief might be sought by the Former Owners if, as was indicated in oral submissions, it is accepted that they are not beneficiaries of the Trust. It was suggested that they are entitled to seek that relief as creditors entitled to pursue claims against the assets of the Trust. Precisely, how a claim of that kind might be articulated is not evident from the pleading.

22    As to the limitation points which Mr Caratti raised as further grounds upon which to support the strike out application, it is not possible to deal with the merits of those claims given the current state of the pleading. It is submitted that limitation points should only be decided in interlocutory proceedings in the clearest of cases. So much may be accepted: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533 (Mason CJ, Dawson, Gaudron and McHugh JJ). However, as to matters of limitation, a statement of claim should at least should be sufficiently clear to enable the respondent to plead any limitation defences.

23    In oral submissions for the Former Owners it was further suggested that the reasoning in Wardley may somehow assist them in demonstrating that the claims are within time. In particular, it was submitted that unless or until it was known that the Trust did not have assets it could not be said that loss had been suffered. I do not understand what was meant by that submission when it comes to dealing within the limitation points raised by Mr Caratti. However, for present purposes it is sufficient to note that by reason of the many deficiencies with the pleading it is not possible to discern the precise nature of the causes of action relied upon and hence it is not possible to form any real view as to whether Mr Caratti's contentions that the claims are out of time should be upheld.

24    The above matters are by no means a full recitation of the difficulties with the pleading. However, they expose fundamental problems with the statement of claim.

25    Accordingly, I am satisfied that this is a clear case where the whole of the statement of claim must be struck out. It fails to plead in concise and clear terms the nature of the claims made. It pleads claims against non-parties. It fails to identify with any precision the nature of the case that is sought to be advanced against Mr Caratti. To the extent that it alleges fraud or knowing participation in breach of trust by Mr Caratti it fails to meet the fundamental requirements for the pleading of material facts to support allegations of that kind. In those circumstances, it is also appropriate to order that the statement of claim be removed from the court file.

26    The application to strike out having been wholly successful, I determined that the Former Owners must pay the costs of the application in any event.

27    The interlocutory application did not seek an order that the proceedings be dismissed. Therefore, the Former Owners were given an opportunity to replead. I directed that any substitute statement of claim be filed and served before 16 February 2024.

Interlocutory orders sought by Former Owners

28    The Former Owners sought interlocutory orders (as foreshadowed in the prayer for relief in the statement of claim) which required disclosure of documents and a mechanism by which documents might be sought from the Deputy Commissioner of Taxation. The proposed orders were directed to obtaining documents concerning the Trust, including documents relating to the accounting and taxation affairs of the Trust. As has been explained, it is not clear from the statement of claim how it is said that the Former Owners have a claim to breach of trust in respect of the administration of the Trust as distinct from some form of claim about how Lot 76 was dealt with in circumstances where the option provided for it to be transferred to WSLC on trust.

29    In those circumstances, I adjourned the further consideration of the interlocutory application for orders as to disclosure for consideration after the substitute statement of claim had been filed so that the application could be considered with a proper understanding of the nature of the claims that the Former Owners seek to pursue against Mr Caratti.

Associate:

Dated:    18 December 2023